Real-time bidding—serving up display ads from a winning bidder within milliseconds directly to a targeted prospect—promises to reach mainstream maturity this year.
“The advantage of RTB to the marketer is that it takes less effort than standard display ad placements,” said John Dietz, VP-applications at ad verification company Adometry Inc. “You can go to a platform and say, "This is what I want to achieve,' and you automate the estimated price to achieve that.”
Dietz said RTB, also known as programmatic ad buying, will never capture 100% of the ad-buying market and that there will always be room for agency media buying desks.
“I don't know if the branding guys will be very involved, but for those marketers with performance-based campaigns, I would see budgets for programmatic buying going upwards of 50% of their ad budgets,” he said.
One common use of RTB is retargeting, in which a prospect examines a product on one website, then surfs to another site where he sees an ad for the product they viewed earlier. The same process is being used along with content. If, for example, a prospect downloaded a white paper or read a product review, programmatic ad buying can present them with a related ad almost immediately.
Consultancy eMarketer said spending on RTB almost doubled in 2012 over the previous year and will make up an estimated 13% of U.S. display ad spending this year. It's on pace to account for a quarter of the display market by 2015.
eMarketer said this trend is being driven to a large extent by Facebook Inc., which last month introduced technology to simplify RTB on its site. Facebook's new system combines RTB with ROI measurement. Beta tests of this service showed that conversion costs were reduced an average of 40% compared with cost-per-click ads, the company said.
In December, Facebook announced it was partnering with ad retargeting and media buying company Chango Inc. Chango's real-time ad placement products will be integrated with Facebook Exchange, which targets users of the social media site based on their browsing history. Facebook's partnership with Chango advances that capability to include users' keyword search history, considered a better indicator of interests and intent.
“Real time bidding is exploding,” said Chris Sukornyk, Chango founder and CEO. “Marketers can now use data to inform their marketing strategy. It's no longer about buying on a particular site. That's still important, but it's more about what you know about your audience.
“In fact, marketing in the future is not just about buying ads but about programmatically building your audience. It's the whole concept of programmatic segmentation, defining the rules around what audience you want to go after.”
RTB is making inroads in new areas on a regular basis. Last month, Accordant Media unveiled a platform for buying mobile impressions within both apps and the mobile Web, targeting users based on device ID and IP source. Also in January, WPP's out-of-home media buying unit, Kinetic Worldwide, started serving digital out-of-home ads in real time, using technology developed by sibling company Spafax Networks
Along with audience building, programmatic buying may offer an antidote of sorts to the privacy arguments currently roiling Washington, D.C., and the marketing community. RTB serves ads to users not based on their online history—with all the attendant worries over privacy and data storage—but rather on their near-immediate online behavior.
“Marketers can assess the true value of a customer and bid based on their perception of that customer's worth,” said Will Margiloff, CEO of ad management technology company IgnitionOne Inc. “And you can do this anonymously, on a non-personally identifiable basis.”
While RTB offers several advantages, Margiloff said marketers will still want to be associated with certain content.
For b-to-b marketers, this presents challenges, said Randall Rozin, global director-brand management and marketing communications at Dow Corning.
“Primarily the challenges exist around finding the appropriate content and sites in which to deliver targeted advertising,” he said. “The closest we can come to this is through a process where we would identify the appropriate sites that we want to buy, select these sites and then bid on these sites' inventory accordingly.”
RTB holds the most promise, Rozin said, for b-to-b advertisers in retargeting programs, reaching out to prospects who earlier had visited a corporate or campaign website. While this may result in some waste, with ads appearing on sites with irrelevant content, the upside is “brand impact, recall and awareness,” he said.
Rozin recommended having a good campaign manager, either in-house or on the agency side, to keep bidding in line with the ever-increasing competition in the RTB space.